India’s stock market watchdog, the Securities and Exchange Board of India (SEBI), amended its Foreign Portfolio Investors (FPI) regulations by replacing the US dollar-denominated registration fee structure with the rupee-denominated payment system. The amended regulations will be effective in the next six months, and the rupee will be the dominant currency for fees for foreign investors registering to be a part of India’s growing market.

The US dollar will no longer be used for registration fees, making FPI rupee-compliant. The six-month window allowed by SEBI is to give foreign investors and intermediaries time to adapt to the new system. The previous registration fee stood at $1,000 and has now been replaced by Rs 90,000 for Category-I FPIs. For Foreign Venture Capital Investors (FVCIs), the fee has been revised from $2,500 to Rs 2.3 lakh. Additionally, the late fee structure will be in rupee denominations and not in US dollars.

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Foreign Investors Must Pay in the Rupee, as SEBI Caps US Dollar Payments

Apart from FPI registration fees, even their everyday compliance work must be settled in the rupee. This includes manual accounting, invoicing, real-time accounting visibility, and financial reporting. In addition, custodians will have to pay a monthly fee of Rs 85,000, replacing the previous annual payment of Rs 10 lakh. Foreign investors will now have to keep the rupee handy to access the Indian market, and not the US dollar.

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This is only a replacement of the US dollar with the rupee for FPI, and the ease of accessing the markets and simplifying regulations remains the same. SEBI has not changed the operational efficiency and has upheld the ease of doing business in the Indian markets. The shift to the rupee-based registration system will give the local currency a much-needed push. Moreover, the INR is battling it out in the forex market to sustain itself against the US dollar. Also, the rupee is now at 95.21 on Wednesday against the USD, and is close to reaching 100.